I paid off a HERO loan in June. What part of the payoff is deductible? Are the program costs, county recording and processing fees and the interest paid, tax deductible?

[MarkJ1951]

The HERO financing was done in April for a new cool roof and heat reflecting exterior wall coverings. After the projects were completed, I decided to payoff the loan. I do not believe any of the project principle is deductible but the other costs might be. Thank you.  

[Opus 17 · Accepted solution]

The only part that is tax deductible is any interest that you paid. The interest would be deductible as mortgage interest, because even though this was not technically a mortgage, it was a loan that was secured by your home.   (If you failed to pay the loan, you could have eventually lost your house.)

 The cost of the improvement as well as all of the other administrative fees  are not tax-deductible, but are added to the cost basis of your home, which may reduce your capital gains when you sell. 

[SweetieJean]

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